PPI increased in January, Retail Sales, and Industrial Production due.
Yesterday we had US producer Inflation Numbers. Published data showed that the monthly PPI rate in January hit a new high since July last year, at 1%. The annual rate increased to 9.7%, while the previous value was revised up by 0.1% to 9.8%. However, it was a bit higher than market estimates. On the other hand, the monthly core PPI is at 0.8%, exceeding market expectations of 0.5%. But the annual rate at 8.3%, was lower than 8.5% of the previous month. Published data confirming the worsening of overheated inflation from the supplier side, which may also be partly due to labor shortages.
After yesterday's data, today we are waiting for Retail Sales, and Industrial production, and tomorrow we will have US Housing numbers. On the retail sales front, we saw that December numbers declined sharply. Total sales fell 1.9%, more severe than consensus expectations. December's weakness mostly was the reason of higher prices and sharply and early holiday shopping in November. On the other hand, we know that the 2022 economy is mostly based on consumer demand and spending. As we know households remain in solid financial shape today, and it will support overall consumer spending in the following months.
On the other hand, Industrial production, as the engine of the economy will tell us what we have to expect from the economic development in the next month. Same as retail sales, industrial production also decreased by 0.1%. Labor shortage and supply chain disruption in the past months had affected productions. On the other hand, we are waiting to see more retail sales and demand, which means that the production level also must increase.
As a market reaction, we can see that market in any case supporting the US dollar. Increasing economic data helps the market sentiment to put more pressure on FED to have more Hawkish policies, while at the same time stronger economy, in mid-term, again supporting the country's currency.
